Thank you for standing by, and welcome to the PulteGroup Inc. Q4 2023 earnings conference call. I would now like to welcome Jim Zeumer, Vice President of Investor Relations, to begin the call. Jim, over to you.

Thanks, Mandeep. Good morning, and let me welcome participants to today’s call. We look forward to discussing PulteGroup’s strong fourth quarter and full-year financial results for the period ended December 31, 2023. I’m joined on today’s call by Ryan Marshall, President and CEO, Bob O’Shaughnessy, Executive Vice President and CFO, and Jim Ossowski, Senior Vice President, Finance. A copy of our earnings release and this morning’s presentation slides have been posted to our corporate website at pultegroup.com. We’ll post an audio replay of this call later today. Please note that consistent with this morning's earnings release, we'll be discussing our debt ratio on both a gross and net basis. A reconciliation of our adjusted results to our reported financials is included in this morning's release and within today's webcast slides. And finally, I want to alert everyone that today’s presentation includes forward-looking statements about the company’s expected future performance. Actual results could differ materially from those suggested by our comments made today. The most significant risk factors that could affect future results are summarized as part of today’s earnings release and within the accompanying presentation slides. These risk factors and other key information are detailed in our SEC filings, including our annual and quarterly reports. Now, let me turn the call over to Ryan. Ryan?

Thanks, Jim, and good morning. I'm excited to speak with you today about PulteGroup's outstanding fourth quarter and full-year financial results. Over the past few years, we have faced macro challenges ranging from COVID, to supply chain disruptions, to skyrocketing mortgage rates. Through it all, we've remained disciplined and consistent in running our operations, but when needed, have quickly adjusted key business practices to position PulteGroup for ongoing success. The benefits of this approach can be seen in the strength of our reported results. Bob will detail our Q4 performance, so let me highlight several of our key operating and financial achievements for the full year of 2023. By strategically increasing our spec production, we had more inventory available to meet the demand of first-time home buyers and those consumers worried about mortgage rate volatility. Increased house inventory was a critical support in PulteGroup delivering 28,600 homes in 2023, and record home sale revenues of $15.6 billion. In the face of increased costs for land, labor, and materials, we carefully managed product offerings, pricing, incentives, and absorption paces to maintain high profitability while ensuring we continue to turn our assets. The result is that we reported outstanding full-year gross margins of 29.3%, which helped drive a 6% increase in earnings per share to a record $11.72 per share and a 27% return on equity. We also continue to efficiently increase our land pipeline, as we completed transactions to put approximately 40,000 new lots under control. Inclusive of these lots, 53% of our total land pipeline is under option, either with the land sellers or through our expanding land banking structures. Since making the decision to expand our use of land banking starting 15 months ago, we have placed approximately 25 communities representing $1.5 billion worth of future land and development spend into such structures. And finally, consistent with our stated capital allocation priorities, we invested $4.3 billion into the business through land acquisition and development spend in 2023, and returned $1.2 billion to investors through share repurchases, dividends, and debt paydown. Inclusive of our 2023 spend, we have repurchased almost half of the 2013 shares outstanding since initiating the program over a decade ago. By remaining consistent in our business practices and making market-responsive adjustments, we reported another year of exceptional financial results. I want to thank the entire PulteGroup team for their tireless efforts and support in delivering superior homes and experiences to our home buyers while providing outstanding financial returns to our investors. Consistent with the broader housing market, we saw homebuying demand being negatively impacted during the early part of the fourth quarter, as 30-year mortgage rates increased toward their 2023 peak of 8%. We then saw buyer sentiment and demand improve, as mortgage rates finally rolled over, ultimately dropping more than 100 basis points as we moved through November and December. The decline in rates helped drive our December net new orders and absorption pace to be the highest month in the quarter. The increased homebuying activity in December was an important driver of the 57% increase in our Q4 net new orders, and demonstrates the desire for home ownership remains high across all buyer groups. It remains our view that the long-term outlook for new home construction is extremely positive. A structural shortage of housing caused by years of underbuilding has only been exacerbated by a lack of resale inventory, as owners are financially and/or emotionally locked into their low-rate mortgages. While the lack of existing home inventory will resolve itself over time, we believe that land entitlement and labor availability challenges will make it difficult to correct for the many years of underbuilding in this country. Given our constructive views on the outlook for housing demand, we are investing in our operations with the goal of growing unit volumes by 5% to 10% annually. Our decision to walk away from option locks as interest rates increased in 2022 will impact our community openings in 2024, leading to our growth this year being closer to the lower end of this range, as we expect closings of approximately 30,000 homes in 2024. For those of you who have followed PulteGroup’s story for the past few years, you know it's never been about growth for growth's sake. Our focus has always been on investing in our business to build shareholder value. Our objective is to grow our volumes while maintaining high returns on equity. To accomplish this, we must continue to intelligently invest in high quality and high returning projects, while continuing to invest in our own assets through the ongoing repurchase of our stock. As we have demonstrated for much of the past decade, we expect to continue to generate strong cash flows that will allow us to fund our business investment, pay our dividend, and return excess capital to our shareholders, all while maintaining our balance sheet strength and flexibility. Our expectation of continued financial success is reflected in this morning's announcement that our board approved a $1.5 billion increase to our share repurchase authorization. With many forecasting interest rates to fall, the economy to stay relatively healthy, and conditions in the job market to remain favorable, there are certainly reasons to be optimistic about housing demand in the coming years. Let me now turn over the call to Bob for a review of our fourth quarter results. Bob?

Thanks, Ryan. Good morning. As Ryan mentioned in his comments, market conditions changed meaningfully as the fourth quarter progressed and as mortgage rates began to fall. Our reported financial results for the period were influenced by these evolving market dynamics, so I'll note any important areas of impact in my prepared remarks. Wholesale revenues in the fourth quarter were $4.2 billion, compared with $5 billion in the prior year. Our lower home sale revenues for the period primarily reflect a 14% decrease in closings to 7,615 homes, along with a 2% decrease in our average sales price to $547,000. I would highlight that our fourth quarter closings came in about 5% below our previous guidance, as sales early in the quarter were negatively impacted by higher mortgage rates and the general softening in overall buyer demand. As Ryan noted, homebuying demand accelerated in the back half of the quarter, but sales, particularly sales of finished spec homes that would close in the quarter, finished below our assumptions. We could have captured incremental sales and closing value by offering higher incentives, but we didn't see that as a worthwhile tradeoff. Given that buyer trends have remained positive in January, I think we made the right choices as we have inventory available to meet the stronger demand. Our mix of closings in the quarter comprised 40% first-time, 36% move-up, and 24% active adult, which is in alignment with our stated goal for the buyer mix for our business. In the fourth quarter of 2022, closings were 36% first-time, 39% move-up, and 25% active adult. Our average community count for the fourth quarter was 919, which represents an 8% increase over last year's fourth quarter average of 850 communities, and was in line with our prior guidance. Looking at order activity in the quarter, our net new orders increased 57% over last year to 6,214 homes. The large increase over last year reflects both improved demand in 2023 and the extremely difficult operating environment in the fourth quarter of 2022. As discussed previously, demand conditions grew increasingly difficult early in the fourth quarter this year as mortgage rates climbed to 8%, but we experienced a notable improvement in buying activity as rates decreased over the back half of the quarter. On a sequential basis, our absorption pace improved from November to December, and we would attribute much of this improvement to the decline in interest rates. Along with stronger demand conditions, the year-over-year increase in fourth quarter net new orders benefited from a decrease in cancellation rates. In the most recent quarter, cancellations as a percentage of beginning period backlog fell to 9%, down from 11% in the comparable prior year period. Looking at our order activity by buyer group, fourth quarter net new orders increased 70% for first-time buyers, 78% for move-up buyers, and 15% for active adult buyers. Our order numbers indicate that demand improved across all buyer groups, which is a very positive dynamic when assessing potential housing demand in 2024. As a result of our sales and closing activity, our quarter-end backlog was 12,146 homes, which is effectively flat with last year. Reflective of the increased mix of first-time buyers and their lower average sales prices, our ending backlog value declined slightly to $7.3 billion. Inclusive of the 7,128 homes we started in the fourth quarter, we ended the year with 16,889 homes in production. 44% of our production is spec, including 1,263 finished specs, which puts us in a strong position to meet buyer demand as we head into the spring selling season. By the end of the fourth quarter, our construction cycle time was down to 130 days, which is a sequential improvement of about two weeks from the end of the third quarter. Going forward, we continue to target getting our cycle time down to 100 days or below by the end of the year. Based on our production pipeline, we expect closings in the first quarter of 2024 to be between 6,200 and 6,600 homes. And given our units under production, we expect full-year deliveries to grow by 5% to 30,000 homes. We currently expect the average sales price of closings to remain in the range of $540,000 to $550,000 for the first quarter and the full year of 2024, which is consistent with our fourth quarter pricing. At the midpoint, this would imply price stability over the course of the year. Our fourth quarter gross margin was 28.9%, which is down approximately 50 basis points from both the fourth quarter of last year and the third quarter of this year, but likely remains the industry leader among the big builders. As with the entire year, our fourth quarter margins reflect higher incentives and input costs. Incentives, which primarily impact revenues, increased 50 basis points sequentially from the third quarter to 6.5%. On the cost side, lower lumber prices offset inflation and other material and labor, but higher land and land development costs impacted margins in the period. Given my prior comments that we expect pricing to be flat in 2024, we anticipate that land and house cost inflation will result in gross margins to be in the range of 28% to 28.5% for each quarter during the year. We reported fourth quarter SG&A expense of $308 million, or 7.4% of home sale revenues, compared with prior year SG&A expense of $351 million, or 7.1%. The 30-basis point drop in overhead leverage can be attributed to the lower closings and revenues realized in the quarter versus the prior year. It should be noted that we recorded a pre-tax insurance benefit in the fourth quarters of both 2023 and 2022. Based on anticipated closing volumes, we expect SG&A expense for the full year of 2024 to be in the range of 9.2% to 9.5% of home sale revenues. Given our typical seasonality of closings, we expect SG&A expense in the first quarter to be approximately 10% of home sale revenues, with overhead leverage improving as we move through the remaining quarters of the year. For the fourth quarter, our financial services operations reported pre-tax income of $44 million, which is up from $24 million last year. The improvement in pre-tax income reflects more favorable market conditions across our financial services platform, coupled with higher capture rates, including an increase to 85%, up from 75% last year in our mortgage operations. Our reported pre-tax income for the most recent quarter was $947 million compared with prior year pre-tax income of $1.2 billion. In the period, we recorded tax expense of $236 million for an effective tax rate of 24.9%. Projecting ahead to 2024, we expect our full-year tax rate to be in the range of 24% to 24.5%. Looking at the bottom line, our reported fourth quarter results showed net income of $711 million or $3.28 per share. In the comparable prior year period, we reported net income of $882 million, or $3.85 per share. For the full year of 2023, we reported net income of $2.6 billion and record earnings of $11.72 per share. Reflective of our strong operating results, in 2023 we generated cash flows from operations of $2.2 billion. Given our current expectations for operating and financial results, along with our plans to increase land investment to $5 billion in the coming year, we expect 2024 cash flows from operations to be approximately $1.8 billion. Turning to our investment and capital allocation activities, we invested $1.3 billion in land acquisition and development in the fourth quarter, of which 59% was for the development of our existing land assets. For the year, our land investment totaled $4.3 billion, of which 59% was for development. Given our constructive views on near and longer-term housing dynamics, as noted, our plan is to increase our land spend to approximately $5 billion in 2024. We would again anticipate a roughly 60/40 split between development and land acquisition. This increase in investment is consistent with Ryan's earlier comments regarding positioning the business to routinely grow future delivery volumes by 5% to 10% per year. Inclusive of our fourth quarter investments, we ended 2023 with 223,000 lots under control, which is an increase of 5% over the prior year. I would highlight that on a year-over-year basis, we lowered our owned lot count by 4,000 lots, while increasing our lots under option by roughly 16,000 lots. As a result, our percentage of lots under option increased to 53%, up from 48% last year. There's still a lot of runway ahead of us to achieve our goal of 70% option lots, but we're moving in the right direction. Based on the investments we've made and our anticipated community openings and closings in 2024, we expect our average community count in 2024 to be up 3% to 5% in each quarter compared to the comparable prior year period. Consistent with our stated capital allocation priorities, we continue to return capital to shareholders in 2023. To that end, we paid out $142 million in dividends and have increased our dividend per share by 25%, starting in the first quarter of 2024. We also repurchased 13.8 billion common shares at a cost of $1 billion for an average price of $72.50 per share, which included $300 million of repurchases at an average price of $83.03 per share in the fourth quarter. With the 13.8 billion shares acquired in 2023, we have repurchased approximately half of the shares outstanding at the time we initiated the program back in 2013. Having repurchased these shares at an average cost of $32.16 per share, we believe it's been a great investment for our shareholders. In addition to buying our stock, in the fourth quarter we took advantage of market conditions by using $35 billion of cash on hand to pay down a portion of our debt. For all of 2023, we retired $101 million of our 2026 and 2027 senior notes through open market transactions, helping to lower our quarter-end debt to capital ratio to 15.9%, down 280 basis points from last year. Adjusting for the $1.8 billion of cash on our balance sheet, we ended the year with a net debt to capital ratio of 1.1%. Now, let me turn the call back to Ryan for some final comments.

Thanks, Bob. Successfully navigating our business through the past 12 months of rising interest rates has been challenging. The same could be said about the past 24, 36, and 48-month periods as we battled through COVID and the global collapse in supply chains. I am extremely proud of how our entire team responded to these events and the exceptional operating and financial results that PulteGroup has delivered over an unprecedented period. Looking back over the five-year period of 2019 to the just recently completed 2023, we grew volumes 5% annually and delivered just under 135,000 homes. To support our growth during this period and for future years, we invested almost $19 billion in cumulative land acquisition and development spend. Through our disciplined land investment, operational focus, and organizational expertise, we capitalized on market conditions to grow earnings per share over this period at a compounded annual growth rate of 34%, while delivering an average annual return on equity of just over 26%. It's this type of strong financial performance during an extended period of market volatility that has prompted increased discussion about the need to reconsider how large homebuilders are valued. I think that if you want to be valued differently, you must demonstrate a fundamental change in how you operate the business and the results you deliver, not just for a year or two, but over an extended period of time. What's different about the past five years is that while investing $19 billion into our operation, we also generated almost $7 billion in net cash flow from operations during the sustained period of growth. In fact, we recorded only one year of negative cash flow from operations since shifting our focus in 2012 from just topline growth to driving high returns over the housing cycle. We paid off $1.1 billion of debt, while cutting our leverage by more than half, to end 2023 with a debt to capital ratio of 15.9%, and a net debt to capital ratio of 1.1%. And we returned $4 billion to shareholders through stock repurchases and dividends. I'd add that the reality is, we've been operating our business in just this way for really the past 10 years. I know stocks reflect performance, so I believe that if we can continue to both grow our business and deliver ROE that remains among the industry leaders, while generating positive cash flow and maintaining a low-risk profile, that our stock price and shareholders will ultimately be rewarded. Let me now turn the call back to Jim Zeumer.

Great. Thanks, Ryan. We're now prepared to open the call for questions. So, Mandeep, if you would explain the process, we'll get started.

Our first question comes from Carl Reichardt with BTIG. Please go ahead.

Thanks. Morning, guys. Hope you're doing well. Ryan, I wanted to ask a little bit more about January. Could you maybe expand on how business has been, and what I'm really interested in is, have you seen enough traffic or sales rates to start to think about more broadly pulling incentives down or even starting to raise base across the footprint?

Carl, so Bob highlighted in the prepared remarks that in Q4, October and November were really below expectations, driven by high rates. We had a great December, the highest month in the quarter in terms of absolute sales and absorptions per community, so that was certainly an anomaly for typical December seasonal patterns. The strength has really continued into January, Carl. So, we’re feeling pretty good about how the year is starting. In terms of kind of where it sets us up for reduced discounts, increased prices, we're going to watch it closely, and I think we've demonstrated through past behavior that we're always looking to find the sweet spot between pace and price. It won't come as a surprise to you, Carl, that affordability with the buyers remains a challenge. So, I think we're going to have to be thoughtful about what we do on both the incentive and the price increase front, but we're feeling pretty good about how the year started.

All right. Thanks for that, Ryan. And then I'm going to ask a couple of questions just on move-up. Obviously, the entry-level business has been strong for volumes. Move-up, a number of your peers have kind of shifted some of their investments more towards the low end. That's been going on for quite some time. Can you talk a little bit about how that - how you look at that business this year? Is there any alteration in mix in terms of communities and whether or not maybe your CAN rate in that business is improving faster than the other businesses? We're trying to see if the existing housing market's unlocking enough that you can start to see even more strength in that particular segment. Thanks.

Yes. Carl, our move-up business performed incredibly well in the quarter. We had, on a year-over-year basis, the growth was north of 70%. So, I think that segment performed very well. The margins out of our move-up, as well as our Del Webb business continue to be some of our best gross margins. So, we're seeing real financial strength there also. And then in terms of community mix, Carl, we're kind of right in line with where our long-term strategic targets are in terms of that part of our business being about 35% of our overall mix. So, we feel pretty good about where that business is positioned.

Yes, just maybe another point of clarification that not only were the sales strong, it was our strongest absorptions on a same-store basis. So, that consumer actually has performed well, to Ryan's point, strong margins and absorptions.

Thank you, Bob. Thanks, Ryan.

Our next question comes from the line of Matthew Bouley with Barclays. Please go ahead.

Good morning, everyone. Thanks for all the details and for taking the questions. Question on the high-level growth algorithm that you gave, Ryan, around the kind of 5% to 10% growth annually. Talking the low end of that this year because you walked away from some deals in 2022. So, my question is, is this kind of sort of a one-year hold, so to speak, and do you have the lands that you need today to kind of get back to your algorithm by 2025? Or how should we think about getting to that level of growth going forward? Thank you.

Yes. Matt, thanks for the question. We feel really good about how we position the land pipeline. We've been investing for growth for a number of years, and we've been trying to do it in a very responsible way specific to having less owned and more optioned land. The fact that over the last 15 months we've made significant headway with our land banking platform has helped with that. So, we really like the number of lots that we have under control at 225,000 plus or minus. And we like the ownership structure, or the way that we control those lands. We think it's a really capital-efficient structure. Specific to your growth target number, yes, we’re going to be at the lower end for 2024. Beyond that, we feel that we've got the right structure to kind of be in that range for future periods.

Yes, maybe I'd add to that, the land for 2025 is under contract and probably in development right now. And so, we have line of sight to 2024, 2025, even up to 2026. We're still working through some of that, but you can see from the approvals that we've made in this most recent quarter or for the year, 40,000 lots, no issues from our perspective in terms of lining up that type of growth rate.

Got it. Okay. That's super helpful. Thanks, guys. Second one, back to the gross margin question, I think you're guiding 2024 margins to be down at roughly 70 basis points from where you exited the fourth quarter. I think I heard you say, Bob, that it's kind of flat pricing and then you've got some headwinds in land, labor, and materials. I'm just curious if you could kind of unpack that a little bit and maybe specifically focus on the land side, how are you kind of thinking about those headwinds to the margin, and how does that kind of play into that guide in 2024? Thank you.

Yes, fair question, and I think we laid it out this way. We see pricing flat during the year. Now, you might see different pricing at different consumer groups. The first time is the most affordability challenge, and that's where we saw actually the biggest decline in the current quarter. But we think pricing is relatively flat through 2024. We see modest, call it, 2% to 4% house construction cost increases in kind of mid to upper single-digit land increases, which is what we've experienced this year. And so, when you mix that all together - the one other point I guess I'd offer to clarify is, we're assuming incentive loads stay about the same at the 6.5% that we saw in this quarter. So, when you marry that all up together, a little bit of a decline year-over-year, but still 28% to 28.5%, pretty strong margin performance.

Perfect. All right, thanks, Bob. Thanks, Ryan. Good luck, guys.

Our next question comes from the line of John Lovallo with UBS. Please go ahead.

Hey guys, thank you for taking my questions. The first one, just maybe talking about January again, curious how orders looked versus normal seasonality, if you will. And I think first quarter absorptions typically rise, call it, 40% to 45% sequentially. Is there anything that would preclude that from happening in your opinion outside of rates maybe in the first quarter of this year?

Yes, John, we didn't give a specific increase out of December. We kept more of our commentary around the qualitative side of things, which I'd reiterate, we're very pleased with how things are performing in January, and we'd expect that strength to continue. So, we continue to be in a situation where there's low supply. Affordability has definitely gotten better. You heard Bob's comment about kind of what we've assumed with our incentive load. So, yes, I'd expect us to have a strong Q1. The one thing - other thing I'd offer that's probably of note is we're starting to see some real signs of life in our western markets. Those have been - that's been a part of the country that was slow for the majority of 2022 and most all of 2023. But in the last 30 to 45 days, we’re really starting to see those markets pick up, which is a welcomed outcome.

Makes sense. And then on the share buyback, that was encouraging to see, and I think could be a good driver of returns as we move forward here. Over the past few years, I think you guys have done about $1 billion per year. The authorization now is closer to $1.8 billion. How are you thinking about 2024 buybacks relative to the past few years? I mean, should we expect north of a billion?

Honestly, I'm going to defer. We typically report the news on that. I think you highlight, we've done about $1 billion a year the last couple of years. We have $0.8 billion in cash. We have offered that we project about $1.8 billion of cash flow from operations in the current year. So, our capital allocation priorities don't change. We've said we're going to increase our land investment to $5 billion. That's up about 16% year-over-year. We increased our dividend 25%. That's not a huge cash element, but still, I think reflective of our confidence in the business. We do have $0.8 billion of authorization. And like I said, we'll report the news. You saw this year we bought back $100 million of our notes because it was attractive. The rate environment has made that a little less attractive, but we always look at liability management as part of the equation. So, really no change to our capital allocation priorities.

Okay. Thank you, guys.

Our next question comes from the line of Stephen Kim with Evercore ISI. Please go ahead.

Yes, thanks very much, guys. First question relates to your land on the balance sheet. I think that your cash flow guide seems to suggest, at least for my modeling, a modest rise in your own lot count, while you keep a year supply of owned lots fairly stable. I was wondering if that's right, and if there's any opportunity or desire to actually reduce your land holdings in years further.

Yes, Stephen, so a couple things there. We are increasing our land spend in 2024 from $4.3 billion to $5 billion. Our mix of developed spend versus land acquisition spend will continue to probably be about 60% development, 40% land acquisition. And then our long-term desire is to have 70% of our land control via option. We highlighted in the prepared remarks, this year we moved that from 48% option to 53% controlled via option. So, we're - I think both in - we demonstrated through results over the past number of years as well as kind of articulated long-term goals, we want to be land lighter. We're going to continue to do it the right way, all with an eye toward delivering a lower risk model that's very capital-efficient as well.

Well, I guess, Ryan, you gave most of that information in your opening remarks, so I appreciate that. But I guess the gist of my question, trying to incrementally understand what your plans are a little bit more is to try to understand the actual amount of owned lots. Are you looking to get to your 70% option versus owned mix by keeping your owned lot count kind of flat, or your supply flat with where you are, or are you actually looking to reduce that in addition to increasing your option lot exposure to kind of get to that 70% eventually?

Yes. Stephen, in terms of years owned, we'd expect to probably keep that right around the level that we're at, maybe a slight decrease. And then ultimately, we would start to flip from a years owned to years option. You'll see a little bit of a trade in that mix.

Yes. My - and this is a little bit of a guess, Ken, roughly 20% to 25% of our total closings, once we get to 70/30, will be finished lots. The rest will - there'll be a lot of optionality in there. But to Bob's point, a lot of our options we take down as raw land chunks, and then we self-develop those. They’re still highly efficient. It's just a different form of an option structure.

Right. I assume that's kind of reflecting your entry-level exposure as well. Second question is, talk to options. Again, could you update us what percent of your ASP is coming from options? And then comment on the margin benefit you get from that, if you could, so we could discern your operating construction, operating construction costs versus your strategy of bringing in these options. Thank you.

Yes. Of the $105,000 of option and lot premium, $80,000 is options, $25,000 is lot premium. I could say for instance, lot premiums are pure margin. I'm not sure that that's fair, right? Pricing doesn't really work that way. But in terms of the option spend, typically it's going to have a relatively rich margin mix, call it, 50%. And so, it is accretive to the overall margin. And the way we try and go to market is, we put a base price house that we think is kind of market standard and what people can and should expect to pay for that house. Then we start talking about, okay, which lot do you want? What are you willing to pay for that lot? That's what generates the $25,000. And then, okay, now in the house, if we're offering optionality - and we don't for everyone, right? So, for the Centex buyer, we may have curated packages or no choices at all. But for the folks that can do structural options for fit and finish, that's what's driving that $80,000 in incremental revenue.

Our next question comes from the line of Alan Ratner with Zelman & Associates. Please go ahead.

Hey, guys, good morning. Thanks for all the details so far. A question on cycle times. So, congrats on the improvement there. Sounds like you expect to see further improvement in 2024. Curious to get to the 100-day target from 130 where you're at right now, you guys are targeting 5% growth. We've heard some other builders may be a little bit higher than that. Is there a level from a labor perspective where if builders try to push starts more significantly, that you think cycle time improvement might stall a bit? Are there any constraints that you could foresee, or is the unleashing of kind of the normalization of the supply chain just kind of independent of whatever the start pace might look like in 2024?

Yes, it’s a fair question. Based on the total amount of production happening, I don't see the industry stressing the labor availability. I'm not suggesting there's a whole bunch of excess labor running around out there, but at least for the big builders, I think we've got great trade relationships, and I think we'll continue to get not only schedule performance but the labor on our job sites. I think the pressure likely comes on dollars before or more so than time. If we're running into labor pinches because of a volume increase, I think it's probably dollars more than time. A lot of the decreases that we'll take, it'll be because we're getting things on a predictable schedule like we used to pre-COVID. So, that’s working better, which allows us to take some kind of dead days out of our schedule that we had - we built in for things to go wrong or for time when we were just literally waiting for material to show up. So, it’s a little bit of that, a little bit of we’re just getting back to the cycle times that we had pre-COVID. So, we trimmed out about 30 or so days in 2024, or in 2023, rather. We think we can get another 30 or so days by the end of 2024, and we'll be back largely in line with pre-COVID cycle times.

Great. Appreciate those added thoughts, Ryan. And then I guess in a similar vein, was curious if you could just give an update on the ICG growth plans there and kind of how that's been trending and what your current thinking is as far as additional market expansion, if there is any.

Yes, Alan, it continues to go well. We have two plants today. Both are focused in the southeast part of the US. Our growth plans are still largely on target. Still largely on target to have approximately eight factories. So, we haven't announced anything new. Similar to our share buybacks, we'll probably report the news on that as opposed to give forward-looking forecasts.

And I guess if I could sneak one in on that, I mean it's hard for us to conceptualize what impact that has on your business, and obviously it's concentrated in a handful of markets right now, but are there certain kind of metrics that you can share with us, whether it's cycle times or costs, margin, etc., that you can kind of demonstrate on a case study basis, how that's contributing to your business right now?

Yes, Alan, so that's - we haven't given a bunch of guidance on that just because it is concentrated into a couple of markets, and we don't feel it's appropriate to extrapolate the entire enterprise yet. As we get further down the path, we'll share more. Conceptually, it's exactly what you highlighted. We're getting cycle time improvements. We're getting better quality, and there are some raw material cost savings that we believe we're getting as well.

Our next question comes from the line of Susan Maklari with Goldman Sachs. Please go ahead.

Thank you. Good morning, everyone, and thanks for fitting me in. My first question is just around the specs. You mentioned that you had about 44%, I think, of your production that's in spec. As you think about the year and the way that the demand may come together, any thoughts on where that may move, or how you're thinking about it longer term?

Yes, Susan, I wouldn't anticipate a massive change from the percentage. We're probably on the higher end of the range that we'll have in spec right now. Specific to the fourth quarter, we put more spec starts in the ground than what we sold, and that was intentional. We wanted to have some additional inventory going into the spring selling season, which we have. So, as we move throughout the year, probably right in line with where we're at or a tad lower.

Okay, that's helpful. And then when we think generally about the potential for rates to come down this year, and that possibly driving some increase on the existing home side of the market, any thoughts on what the implications of that could be, especially perhaps on the move-up and the active adult parts of the businesses, and any initiatives you have relative to that?

Yes, Susan, with the rate cuts that are forecasted, I don't see it being at a level that's going to unleash a tidal wave of resale inventory. So, is it better than where we're at today? Certainly. Will that start to free up some resale inventory? I think so. And I think that's probably helpful against the backdrop of, we continue to be under-supplied in the country. So, on balance, I don't think it has much impact at all on what we're projecting for our business in 2024.

Our final question comes from the line of Rafe Jadrosich with Bank of America, where we've reached the time allotment for this morning's call. Please go ahead.

Great. Thank you, and thanks for taking my questions. Can you - in terms of the additional 30 days of build cycle improvement you're expecting for 2024, can you talk about what the build cycles are in homes that you're starting today? Like, are you already at that 100-day level, and is that improvement embedded in your cash flow guide?

Yes, Rafe, it's a fair question. The homes that we're starting today will deliver in kind of late - so homes we’re starting today will deliver in Q2 basically. So, no, we're not at the 100 days yet. Now, that being said, there are some markets and some communities where we’re at the 100 days, and in fact, we were at the 100 days last year. When you blend it all together, we think it'll be Q4 before we're at the 100 days that we've highlighted as our goal.

And Rafe, our guide does factor in what we see in terms of cycle times during the year, the cash flow guide, to your question.

Appreciate everybody's time this morning. We'll certainly be available over the rest of the day if you have any additional questions. Otherwise, we'll look forward to speaking with you on our next earnings call.

This concludes today's call. You may now disconnect.